Who Will Pay for Digital Health? The Investor Point of View

Abstract

The beauty of investing in digital health is that it combines the high-risk/high-reward paradigm, synonymous with the tech industry, and the stability/defensiveness paradigm of the healthcare industry, thereby hedging or mitigating the investor's risk and providing an ideal counterbalance to future rewards. While many investors from Wall Street to Wuxi are singularly driven by maximizing profit, a great number of healthcare and digital health investors are driven by the tandem outlook of both financial profitability and improved societal benefits. In this chapter, we will view the digital health industry through the lens of an investor, starting with the investor's contribution throughout the entrepreneurial life cycle and ending with the main drivers behind digital health investing. The investor perspective will often provide key insights for budding digital health entrepreneurs and will share with them some tricks-of-the-trade. This chapter will also provide them with insights into the inner workings and motivations of the different types of investors. The chapter will also cover the current state of digital health investors and discuss some of their investments. We will also cover some of the current and future models of digital health finance. Perhaps the best way to summarize this chapter is that the greatest investors, like the best spouses, always see the potential of the person in front of them rather than their current status. Technical terms, such as top line revenue, net present value, P/E (price: earnings) ratio, and buzz words such as traction, big data, and brighter days ahead, play second-fiddle to the all-important truth in investing: you invest in the potential of the team.